Mortgage Scene: There Should Be a Probe of Homestore's 'Barter Deals'.(Homestore.com Inc.)(Brief Article)

While the rest of the financial press pounds the Enron pavement, the mortgage and housing industry has contended with a mini-Enron of its own: the implosion of Homestore.com, the nation's largest online listing service. (It also operates a mortgage website called HomeLender.com.)

It's not just that Homestore.com is a publicly-traded dot-com that crashed and burned, what's more important is who is behind the firm, who grub-staked it, and who "pumped" its shares. But first let's review the firm's rise and fall and how it affected shareholders.

The brainchild of former Telecommunications Inc. executive (TCI as in John Malone) Stuart Wolff and the National Association of Realtors, Homestore's stock peaked out at $138 a share in early 2000 before coming back down to earth. How close to mother earth did Homestore get? Recently it traded as low as $2.30 a share but its all-time low, reached in February, was 53 cents.

A month or so back - with "Dr." Wolff having departed - Homestore came out and restated earnings, turning an annual loss of about $300 million into a loss of $1.5 billion. Yes, that's right, $1.5 billion.

How did Homestore make money, or should I say, try to make money? According to one SEC filing: "We currently generate revenues from several sources, including subscription fees from agents, brokers, homebuilders and rental property owners and fees from advertisers."

The company, in case you're wondering, never turned a profit. Here's why: it really wasn't making much in the way of "real" revenue, as in cash, as in the stuff you can take to the bank and deposit. Instead of actually getting much in the way of real fees and ad dollars, it was cutting "barter" deals with its online partners and booking (if I understand it correctly) the value of those barter deals as revenue.

If I understand the phrase "barter" correctly, you can't take a bag of "barter" ...